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It allows you to set the number of times the timer will overflow/reset between interrupts being generated for that timer.

eg. If you using the timer for a PWM timebase at high frequencies, you may want to update the PWM value regularly, but not every single PWM cycle.

You could use the postscaler so you only get an interrupt every eg. eight PWM cycles.
Or just if you need a fast PWM and a slower system "tick" to update other things.

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